Small Business and Government

By Andrew J. Birol, President, Birol Growth Consulting, Inc.

Dear Friends and Colleagues:

Recently I was interviewed on whether small businesses will be hurt by direct aid to ailing cities being eliminated in the final Federal Tax bill, and why many local communities are crying foul. My first reaction was, "What does this have to do with my marketplace of business owners?" Remembering my macroeconomics courses, I thought twice and decided there is some impact.

Small businesses fall into two categories: those who pursue growth by selling to private customers, and those who pursue money by obtaining funding from private sources or government grants.

For those small businesses that pursue customers to grow their businesses, the direct impact of such grant dollars drying up is minimal. Perhaps some of their customers will not purchase as much as if they were relying on grants. The small business owner who stays adept at reducing the pain or increasing the opportunity of his customers is seldom impacted by government cuts.

For the few small businesses whose main customer or funding source is a governmental agency, the impact will be larger. I hope that such firms do not have all their sales eggs in such a single government agency or program. Just as in serving commercial customers, it is critical to build broad and deep relationships within one’s governmental customer to not be reliant on a single buyer or program that may leave, disappear or grow fickle.

Probably the bigger impact of cuts in local aid to cities is its negative contribution to the psyche of the business owner. Every day he or she must take more risks, make a bigger payroll and decide to keep trying. For those business owners with less confidence and more ambivalence, any bad news, including that of government cuts, provides just one more reason not to try, grow or compete. As the external distractions multiply, and small business owners allow the general economic malaise to infect their own resolve, the outcomes cannot be constructive. My advice as always is to focus on one's best and highest use, and spend all available energies on finding, keeping and growing more customers. Even if your small business is wholly dependent on a government or tax grant to survive, my advice still stands. Delight whom you serve, and often your funding will not be cut while other suppliers see theirs go away.